A scene from 'BioShock Infinite,' one of several high-profile video games launching during the first half of 2013. / Irrational Games/2K Games

by Brett Molina and Mike Snider, USA TODAY

by Brett Molina and Mike Snider, USA TODAY

After a year met by sagging sales, video game makers are seeking salvation in the form of fresh hardware. New home video game consoles from Microsoft and Sony - makers of the Xbox 360 and PlayStation 3 - are expected to join Nintendo's Wii U on store shelves as soon as this year, and their arrival could not come at a better time.

While there's an impressive lineup of potential hit releases on the way for the current game systems, it's the prospect of new hardware - technologically superior successors to today's entrenched consoles - that has created some optimism that 2013 could mark the beginning of an industry turnaround.

Regardless, it is going to be an "interesting" year for video games, says Arvind Bhatia, managing director of equity research at investment firm Sterne Agee. "There will be many cross currents. A strong lineup of titles in the first half coupled with easy comparisons to last year's dismal performance means sales could improve."

The announcement of new consoles, perhaps at the Electronic Entertainment Expo in June, should "trigger renewed investor interest in the category because it will signal the start of a new console cycle, which leads to higher sales in the long run," Bhatia says. The rub is that "as consumers begin to anticipate the actual launches of new consoles this holiday, sales of the existing generation of games could be weak."

In some ways 2012 was forgettable for makers of video games played on console systems, either connected to the television or dedicated handhelds. Total retail video game sales plunged 22%, the largest drop amid four straight years of decline, according to market tracking firm NPD Group.

Contributing to the decline is that video game systems are lasting longer. Previously, most game console makers went four to five years between bringing new systems to market. The Xbox made its debut in 2001; the Xbox 360 succeeded it in 2005. Sony did stretch things a bit, allowing the PlayStation six years before releasing the PS2.

Today, the Xbox 360 is entering its eighth year on the market, while the PlayStation 3 and Nintendo Wii have been out for more than six years.

"Developers have really squeezed out every last bit of innovation they could out of the current hardware," says Jesse Divnich, analyst with Electronic Entertainment Design and Research. "Both developers and consumers are screaming for new technology."

Will new players embrace consoles?

Still, the current console generation caps one of the most lucrative periods for the traditional video game business. In 2008, with the Wii dominant and the Xbox 360 and PS3 hitting their strides, total retail sales set a record of $21.3 billion.

The ranks of video game players have swollen to historic levels. In 2005, the last key transition year for consoles, the industry claimed about 150 million video game players in the U.S. Today, it's more than 211 million, or nearly two-thirds of Americans, the NPD Group says.

But not all of them play traditional console games. The lure of free, easy to play Facebook games and free or lower-price games on smartphones and tablets has expanded the game-playing populace. A key question is whether some of those new players will graduate to the console games played in the family room or if they'll become accustomed to low-priced content.

While spending on physical retail game sales has been on the decline, digital game sales have risen dramatically. Digital sales - including mobile games for phones and tablets, full games for consoles and handhelds, extra levels and other in-game content - rose 22% in the third quarter of 2012, accounting for $1.4 billion, according to NPD.

Diehard gamers are crucial to any turnaround for the broader industry, says Wedbush Securities analyst Michael Pachter. Casual players flocked to Nintendo's Wii but bought fewer games over the life of the Wii than so-called hardcore gamers do.

A last wave of hit titles for current consoles and the promise of shiny new systems will stimulate sales among diehards, Pachter says. "This is the year we overcome this consistent, persistent decline in Wii software sales, and the hard-core gamer takes back ownership of the industry," he says.

The question is when the new systems will arrive. Although Microsoft and Sony have yet to confirm successors for the Xbox 360 and PS3, an appearance this year seems inevitable. "(Sony) is going to announce something this quarter," says Pachter. "I know they intend to launch in October or November. Microsoft plans on a 2013 launch, but I don't think they'll be destroyed if they do (an early) 2014 launch."

A sign that new hardware looms large is an unprecedented slate of blockbuster video game releases during the first half of this year, aimed to satisfy console owners seeking to eke out more value from their investment. Among the most-anticipated include tried-and-true franchises such as Microsoft's Gears of War: Judgment, 2K Games' epic BioShock Infinite and Rockstar Games' Grand Theft Auto V. All three join a collection of potential hits launching in the first five months.

That also sounds right to DFC Intelligence analyst David Cole. "We don't know what is coming yet. We don't know if they will launch in 2013, and even if they do, it will be late in the year and probably not turn things around too much because they will have a limited installed base," he says. "We see 2013 as another decline with a pickup in 2014."

The pipeline of hits for the current Xbox and PlayStation "really stops around May or June," says Justin McElroy, managing editor for video game website Polygon. "To me, that really screams next-generation this fall."

Wii U kicks off the next-gen wave

Officially, the next generation of game systems began in November, with the arrival of Nintendo's Wii U. In addition to the system's high-definition graphics, the Wii U uses a GamePad controller with the properties of a tablet. The wireless device is equipped with a camera, motion sensors and touch-screen for playing games, as well as using apps such as Netflix and Hulu and controlling the television through its Nintendo TVii service.

Since its November launch, the Wii U has sold nearly 900,000 units, an "OK" mark, Pachter says. The Wii U library remains light, leaning heavily on third-party titles already available on other consoles. Earlier this week, however, Nintendo said new games based on the popular Mario and Zelda franchises were in the works for Wii U.

Still, there are also concerns about how Nintendo has marketed the device to consumers. "There's no Wii Sports-like phenomenon so far, and consumers have struggled to understand what makes Wii U different than the regular Wii," says GameTrailers host Geoff Keighley. Pachter agrees. "It looks like it's a peripheral for the Wii," he says.

As with most shifts in video game technology, players can expect boosts in three-dimensional graphics and realistic physics with new hardware, as well as the continued expansion into other forms of entertainment, such as movies, TV and the Internet. Expect console makers to adapt to different game delivery methods that stretch beyond the physical disc.

"With high-speed Internet connectivity in more living rooms, the world of gaming can reach many more homes," Sebastian says. Regardless of platform, he says, "the business has changed. Casual and kids games are now largely free-to-play or cheap downloads. But the large scale 'core' games can still find gamers willing to pay a lot up front."

In addition to ramped-up processing power, the new systems will also likely sport super-size hard drives. "With the 360 and PS3, you saw (both of) them dipping their toes into digital delivery, but still built for retail games," says McElroy. "With the next-generation consoles ... you're going to see people wanting to have a lot of games downloaded to their system."

The so-called second screen could also play a larger role. The Wii U has kicked off the trend with its GamePad, which can offer an additional point of view beyond the TV or serve as the home screen to play a game. Similarly, Microsoft's SmartGlass app works with the Xbox 360 to let those playing Dance Central 3 program the jukebox on a Windows phone or tablet while others play on the TV.

Sony has also flirted with second-screen functions such as cross play involving the PS3 and the handheld Vita. In the upcoming MLB 13: The Show baseball game, players on the console and handheld can simultaneously compete in a home run derby.

To succeed, developers must not only focus on quality but also adapt to shifting consumer desires, says Ken Levine, co-founder of Irrational Games and creative director of BioShock Infinite. In advance of the game's release (March 26), Levine and Irrational Games writer Joe Fielder have written a prequel, BioShock Infinite: Mind in Revolt e-book, out now in Amazon's Kindle store ($2.99 or free with a pre-order of the game).

"You have to be incredibly flexible and incredibly willing to learn how to figure out how to bring quality to different types of experiences and different platforms and with different payment models," Levine says.

That's good news for video game lovers in search of always-improving experiences, but that means added stress for those developing the next-generation of video games. "The thing I have learned over the years," Levine says, "is that, sorry for the cliché, but the only constant is change."

EDITOR'S NOTE: Join journalists Mike Snider, Brett Molina, Marc Saltzman and other special guests for a virtual Google+ Hangout to discuss the coming year in video games Monday at noon p.m. ET at http://google.com/+USATODAY